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Does income taxation affect partners’ household chores?

We study the impact of income taxation on both partners’ allocation of time to market work and unpaid house work in households with two adults. We estimate a structural household utility model in which the marginal utilities of leisure and house work of both partners are modelled as random coefficients, depending on observed and unobserved characteristics of the household and the two partners. We use a discrete choice model with choice sets of 2,401 points for each couple, distinguishing seven market work intervals and seven house work intervals for each partner. The model is estimated using data for France, which taxes incomes of married couples jointly, like, for instance, Germany and the US. We find that both partners’ market and non-market time allocation decisions are responsive to changes in the tax system or other policy changes that change the financial incentives. Women’s time allocation is more responsive to the own and the partner’s wage rate than men’s. Tax policy simulations suggest that moving from joint taxation for married couples to separate taxation of each spouse would go a small step in the direction of equalizing market and non-market work of spouses. Selective taxation with smaller tax rates for women than for men would magnify these effects.

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Paper provided by Observatoire Francais des Conjonctures Economiques (OFCE) in its series Documents de Travail de l'OFCE with number 2010-12.

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Date of creation: Jun 2010
Date of revision:
Handle: RePEc:fce:doctra:1012
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  1. Frederic VERMEULEN, 2000. "Collective Household Models: Principles and Main Results," Center for Economic Studies - Discussion papers ces0028, Katholieke Universiteit Leuven, Centrum voor Economische Studiën.
  2. Sandmo, Agnar, 1990. "Tax Distortions and Household Production," Oxford Economic Papers, Oxford University Press, vol. 42(1), pages 78-90, January.
  3. Kenneth Train, 2003. "Discrete Choice Methods with Simulation," Online economics textbooks, SUNY-Oswego, Department of Economics, number emetr2.
  4. Flipo, Anne & Fougere, Denis & Olier, Lucile, 2007. "Is the household demand for in-home services sensitive to tax reductions? The French case," Journal of Public Economics, Elsevier, vol. 91(1-2), pages 365-385, February.
  5. Apps, Patricia & Rees, Ray, 1999. "On the taxation of trade within and between households," Journal of Public Economics, Elsevier, vol. 73(2), pages 241-263, August.
  6. Richard Blundell & Ian Walker, 1986. "A Life-Cycle Consistent Empirical Model of Family Labour Supply Using Cross-Section Data," Review of Economic Studies, Oxford University Press, vol. 53(4), pages 539-558.
  7. Gelber, Alexander M. & Mitchell, Joshua W., 2009. "Taxes and Time Allocation: Evidence from Single Women," MPRA Paper 19148, University Library of Munich, Germany.
  8. Rees, Ray, 1988. "Taxation and the Household," Munich Reprints in Economics 3411, University of Munich, Department of Economics.
  9. Hans Bloemen & Elena Stancanelli, 2008. "How Do Parents Allocate Time? The Effects of Wages and Income," Sciences Po publications 3679, Sciences Po.
  10. van Soest, A.H.O. & Das, J.W.M. & Gong, X., 2001. "A Structural Labour Supply Model with Flexible Preferences," Other publications TiSEM 07a46b83-f128-4ea5-8498-9, Tilburg University, School of Economics and Management.
  11. Boskin, Michael J., 1975. "Efficiency aspects of the differential tax treatment of market and household economic activity," Journal of Public Economics, Elsevier, vol. 4(1), pages 1-25, February.
  12. Viktor Steiner & Katharina Wrohlich, 2004. "Household Taxation, Income Splitting and Labor Supply Incentives: A Microsimulation Study for Germany," Discussion Papers of DIW Berlin 421, DIW Berlin, German Institute for Economic Research.
  13. Hans G. Bloemen & Elena G. F. Stancanelli, 2008. "How do spouses allocate time : the effects of wages and income," THEMA Working Papers 2008-40, THEMA (THéorie Economique, Modélisation et Applications), Université de Cergy-Pontoise.
  14. Blomquist, N. Soren, 1993. "Interdependent behavior and the effect of taxes," Journal of Public Economics, Elsevier, vol. 51(2), pages 211-218, June.
  15. Richard Rogerson, 2009. "Market Work, Home Work, and Taxes: A Cross-Country Analysis," Review of International Economics, Wiley Blackwell, vol. 17(3), pages 588-601, 08.
  16. Apps, Patricia F. & Rees, Ray, 1988. "Taxation and the household," Journal of Public Economics, Elsevier, vol. 35(3), pages 355-369, April.
  17. Blomquist, Soren, 1996. "Estimation methods for male labor supply functions How to take account of nonlinear taxes," Journal of Econometrics, Elsevier, vol. 70(2), pages 383-405, February.
  18. Arthur van Soest, 1995. "Structural Models of Family Labor Supply: A Discrete Choice Approach," Journal of Human Resources, University of Wisconsin Press, vol. 30(1), pages 63-88.
  19. François Bourguignon & Thierry Magnac, 1990. "Labor Supply and Taxation in France," Journal of Human Resources, University of Wisconsin Press, vol. 25(3), pages 358-389.
  20. Apps, Patricia, 1982. "Institutional inequality and tax incidence," Journal of Public Economics, Elsevier, vol. 18(2), pages 217-242, July.
  21. Leuthold, Jane H., 1983. "Home production and the tax system," Journal of Economic Psychology, Elsevier, vol. 3(2), pages 145-157, June.
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